Government R&D subsidies and firm innovation performance: The moderating role of accounting information quality

The effects of government R&D subsidies can vary across recipient firms, depending on the various characteristics a firm, potentially including firm's accounting information quality (AIQ). It has been well recognized that high AIQ helps to reduce asymmetry between investors and firms and, consequently, improves investment efficiency. However, there is lack clear understanding about specific role corporate in ex-post effectiveness subsidies. This study thus examines main both firms’ inputs innovation outputs, positive moderating played by information. data include 1,561 sample listed stock markets China 11,853 firm-year observations 2007 2015. We find effect economically sizable where an improved (discretionary accruals), standard deviation, increases additionality 16% for 4% growth inputs. In addition, we have stronger favorable outputs (the number patents) those with higher AIQ.